Scotland faces a mass exodus of high earners to England unless Nicola Sturgeon follows suit on Downing Street’s planned cuts to income tax, economists and business leaders have warned.
Economists have predicted a fifth of the estimated 18,000 top-rate taxpayers in Scotland will move south of the border if the SNP administration does not also cut the top rate of income tax to 40 per cent.
The Scottish Tories warned on Sunday that Scotland risks “being left behind” if SNP ministers at Holyrood fail to match the tax-cutting proposals being introduced in the rest of the UK.
Changes to income tax announced in the mini-Budget include a cut in the basic rate to 19p in the pound, as well as the scrapping of the top rate for those earning £150,000 a year or more.
Those measures do not apply in Scotland, where control over income tax rates and bands is devolved.
The rate of income tax for Scotland’s highest earners currently stands at 46 per cent for the highest earners, while in England it is to be cut from 45 per cent to 40 per cent.
While Ian Blackford, the SNP Westminster leader, condemned Chancellor Kwasi Kwarteng’s package of measures as “nonsense”, John Lamont, the Scottish Conservative MP, urged the Scottish Government to adopt similar “radical” proposals.
Douglas McWilliams, an economist and deputy chairman of the Centre for Economics and Business Research, told The Sunday Times that “it would be realistic to assume about 20 per cent of top-rate taxpayers could move south”.
Mr Lamont told BBC Scotland’s The Sunday Show: “What I don’t want to see is Scotland being left behind while the rest of the UK powers ahead with this new, ambitious, radical plan set out by the Chancellor on Friday.”
Richard Lochhead, the Scottish Government minister, has already vowed that the SNP will continue with a “fairer and more progressive approach to taxation”.
However, Mr Blackford said “millions and millions of ordinary workers” across the UK would have less cash because of the changes – warning also that these could see the country endure a longer and deeper recession.
The Institute for Fiscal Studies, an economic think tank, has calculated that only those people earning £155,000 a year or more will be “net beneficiaries” from the new Chancellor’s package.